01/20/2005 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB42 | |
| HB25 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 42 | TELECONFERENCED | |
| *+ | HB 25 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
January 20, 2005
8:04 a.m.
MEMBERS PRESENT
Representative Kurt Olson, Co-Chair
Representative Bill Thomas, Co-Chair
Representative Gabrielle LeDoux
Representative Mark Neuman
Representative Sharon Cissna
Representative Woodie Salmon
MEMBERS ABSENT
Representative Pete Kott
COMMITTEE CALENDAR
HOUSE BILL NO. 42
"An Act naming the Joe Williams, Sr., Coastal Trail."
- MOVED HB 42 OUT OF COMMITTEE
HOUSE BILL NO. 25
"An Act relating to the sharing of fisheries business tax
revenue with municipalities; and providing for an effective
date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 42
SHORT TITLE: JOE WILLIAMS, SR., COASTAL TRAIL
SPONSOR(S): REPRESENTATIVE(S) ELKINS
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, TRA
01/20/05 (H) CRA AT 8:00 AM CAPITOL 124
BILL: HB 25
SHORT TITLE: REFUND OF FISH BUSINESS TAX TO MUNIS
SPONSOR(S): REPRESENTATIVE(S) SEATON
01/10/05 (H) PREFILE RELEASED 12/30/04
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) CRA, FIN
01/20/05 (H) CRA AT 8:00 AM CAPITOL 124
WITNESS REGISTER
JOSH GOVAARS, Staff
to Representative Jim Elkins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 42 on behalf of the sponsor.
JOE WILLIAMS, JR.
Saxman, Alaska
POSITION STATEMENT: Testified in support of HB 42.
GILBERT BENGE, Mayor
City of Saxman
Saxman, Alaska
POSITION STATEMENT: Testified in support of HB 42.
YEDA HICKS, Councilman
City of Saxman
Saxman, Alaska
POSITION STATEMENT: Related the pride HB 42 would generate for
the youth in the community.
FRANK SALUDO, Vice Mayor
City of Saxman
Saxman, Alaska
POSITION STATEMENT: Testified in support of HB 42.
REPRESENTATIVE PAUL SEATON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 25.
ACTION NARRATIVE
CO-CHAIR BILL THOMAS called the House Community and Regional
Affairs Standing Committee meeting to order at 8:04:36 AM.
Representatives Thomas, Olson, LeDoux, Neuman, and Salmon were
present at the call to order. Representative Cissna arrived as
the meeting was in progress.
CO-CHAIR THOMAS reviewed the rules the committee would follow.
HB 42-JOE WILLIAMS, SR., COASTAL TRAIL
CO-CHAIR THOMAS announced that the first order of business would
be HOUSE BILL NO. 42, "An Act naming the Joe Williams, Sr.,
Coastal Trail."
8:06:09 AM
JOSH GOVAARS, Staff to Representative Jim Elkins, Alaska State
Legislature, explained that HB 42 would rename the trail between
Ketchikan and Saxman to the Joe Williams, Sr., Coastal Trail.
Joe Williams, Sr., was an advocate for the construction of this
historic trail for many years. Furthermore, Joe Williams, Sr.,
worked very hard to connect the people of Ketchikan and Saxman.
The trail was funded by [former] Representative Bill Williams.
The trail has been popular for the people of both communities as
well as visitors. Renaming the trail will honor the memory of
Joe Williams, Sr., as well as his accomplishments. Mr. Govaars
noted a letter from Saxman which is included in the committee
packet.
8:08:06 AM
MR. GOVAARS, in response to Representative Neuman, stated that
he has heard of no opposition to renaming the trail.
8:08:18 AM
MR. GOVAARS, in response to Representative Salmon, related that
Joe Williams, Sr., passed away a number of years ago while Joe
Williams the third and forth still reside in the City of Saxman.
This was the traditional trail that the people of the City of
Saxman used to go to Ketchikan. When the City of Saxman was
moved to its current location, a foot path was used between the
two towns. When the road was constructed people were left to
walk on the side of the road, which was dangerous. Former
Representative Williams was instrumental in obtaining the
funding for the foot trail, which his father proposed.
8:09:57 AM
JOE WILLIAMS, JR., said that he was honored this is even being
considered. He related that he is in favor of renaming the
trail. He echoed earlier testimony that many people use the
trail. In fact, the trail is used on a daily basis and often by
families. It's humbling to have the trail named after his
father, he remarked.
8:12:36 AM
GILBERT BENGE, Mayor, City of Saxman, related that he has walked
this historic trail, which passes through beautiful scenery,
many times. Mayor Benge related his support for renaming the
trail, and noted that renaming the trail is an honor for the
family as well as the community.
8:13:50 AM
YEDA HICKS, Councilman, City of Saxman, stated that renaming the
trail after a prominent Native Alaskan will be a source of pride
for youth in the community.
8:14:42 AM
FRANK SALUDO, Vice Mayor, City of Saxman, recalled having to
walk on the side of the road. The trail is nice to have, he
said. Therefore, he related his support for HB 42.
8:15:40 AM
REPRESENTATIVE LeDOUX moved to report HB 42 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, it was so ordered.
The committee took a brief at-ease.
HB 25-REFUND OF FISH BUSINESS TAX TO MUNIS
CO-CHAIR THOMAS announced that the next order of business would
be HOUSE BILL NO. 25, "An Act relating to the sharing of
fisheries business tax revenue with municipalities; and
providing for an effective date."
8:17:21 AM
CO-CHAIR OLSON moved to adopt CSHB 25, Version 23-LS0169\G,
Utermohle, 1/19/05, as the working document. There being no
objection, Version G was before the committee.
8:17:34 AM
REPRESENTATIVE PAUL SEATON, Alaska State Legislature, speaking
as the sponsor, explained that this legislation attempts to
bring the [fisheries business] taxes to the communities that
generate the revenues. He noted that there are three components
of the fisheries business tax, which is also known as the raw
fish tax because the tax is based on the value of the raw fish
as they come off the vessel. The fisheries business tax is paid
by the processor or buyer not the fisherman. The first
component of the fisheries business tax is the processing tax
which, for a developed fishery, is generally 3 percent on the
ex-vessel value of the fish and is paid by the processor.
[Within] the processing tax there is also a 1 percent
undeveloped tax that is used to stimulate underutilized
fisheries. [Within the processing tax there is also] a 5
percent tax for floating processors. Representative Seaton
explained that 50 percent of the [fisheries business tax] goes
to the general fund (GF) while the remaining 50 percent is
returned to the communities where the processing takes place.
In communities in which there is a city and a borough, half of
the 50 percent returned to community goes to the city and the
remaining half goes to the borough. He noted that the vast
majority of fisheries business taxes are processed in the state.
REPRESENTATIVE SEATON turned to the fish that are processed
outside a borough or city. In those cases, 50 percent of the
revenue goes to the GF and the other 50 percent goes to the
Department of Commerce, Community, & Economic Development
(DCCED). The department uses a formula to broadly distribute
that 50 percent throughout fishing communities in the state.
The formula is based on the quantity of seafood that's brought
into that community or rather the total value of the fishery in
that area as well as the population, regardless of where the tax
was generated.
REPRESENTATIVE SEATON turned to the third component of the
fisheries business tax, which addresses the situation in which
fish are landed in a community but are exported from the state
unprocessed. Of the [tax collected] on those exported fish, 50
percent of the tax goes to the GF while the other 50 percent
goes to DCCED. This legislation would change statute such that
50 percent of the [tax revenue] collected would go to the port
at which it's landed. Therefore, this legislation attempts to
have the revenue sharing at the location where the facilities
for landing and handling the fish are located.
REPRESENTATIVE SEATON noted that the committee packet includes
an amendment, which clarifies that this change would be
applicable from the point of passage forward. He also noted
other items included in the committee packet, including the zero
fiscal note with its analysis, a memorandum from Legal and
Research Services, and background information. He pointed out
that the fiscal note analysis for bill version HB 25(A), under
the heading "Technical Comments" specifies: "The bill language
does not provide a methodology for determining the situs of a
sale although it must necessarily be the place of origination or
the location of the taxpayer that sells the product." However,
Version G rectified the aforementioned by defining the port of
landing. Representative Seaton drew attention to a chart
entitled "Distribution of Fish Business Tax on Fish Exported
Unprocessed Based on 2003 Tax Returns". The aforementioned
chart specifies the proposed distribution under HB 25 versus the
actual distribution in 2004. The purpose of this legislation is
to bring the tax to the facilities necessary for economic
development and generates the tax base. He also drew attention
to the document entitled "ESTIMATED DCCED Payments". He noted
that the document entitled "ESTIMATED DCCED Payments" only shows
where DCCED wouldn't distribute money, although the state would
distribute the money directly to those communities [under HB
25]. Confidentiality rules restrict the sharing of information
regarding the distribution amount to particular communities, he
noted.
8:30:24 AM
REPRESENTATIVE SALMON referred to the document entitled
"ESTIMATED DCCED Payments", and inquired as to why the rest of
the state is not included.
REPRESENTATIVE SEATON explained that DCCED bases its formula on
fishing communities, and therefore the community has to have
some tie to fishing. Those communities with some tie to fishing
apply for the money. He noted that there has been an
approximately $3,000 minimum to each community. This
legislation "would change about a third of that, direct it to
the communities that generate the tax so that even under this
scenario, each of those communities would receive at least ...
$2,000, even if they don't generate the tax." This legislation
doesn't change the other sources of revenue for DCCED. For
instance, the money from fish processed outside of any
municipality goes to DCCED, which distributes the money per the
formula.
8:32:06 AM
REPRESENTATIVE LeDOUX asked if Representative Seaton would be
able to obtain a community-by-community breakdown for the chart
entitled "Distribution of Fish Business Tax on Fish Exported
Unprocessed Based on 2003 Tax Returns."
REPRESENTATIVE SEATON said he hoped to obtain such. However,
it's problematic because information hasn't been collected
community by community. He highlighted that a number of fish
are exported unprocessed. Although the aforementioned is
supported and encouraged because those fish are worth more to
the fisheries, that community loses the tax base. He provided
examples of such situations in Chignik and Sitka.
Representative Seaton informed the committee that there are
three different definitions of processing from each of the
following entities: ADF&G, DCCED, and the Department of
Revenue. Trying to change the definition of processing is
problematic, which is why this legislation takes the approach it
does. Troll-caught salmon, he highlighted, are unprocessed
under the Department of Revenue's definition, and therefore
there is no tax base that returns to that local community.
8:35:25 AM
CO-CHAIR THOMAS surmised that the processing is primarily done
by independent operations.
REPRESENTATIVE SEATON agreed, but pointed out that Homer, where
the fish go through an auction system, is the largest halibut
port in the world. He estimated that approximately 80 percent
of Homer's fish is trucked to British Columbia, which is a loss
of the tax base for Homer. He reiterated that this legislation
doesn't increase the tax on anyone, rather it returns the tax to
the port where the facilities are being provided.
8:37:38 AM
CO-CHAIR OLSON asked whether there is any impact on secondary
processors.
REPRESENTATIVE SEATON replied no, adding that this is a tax paid
by the first buyer. He noted that the direct market legislation
includes a provision that allows a direct marketer who only
sells to a secondary buyer the ability to pass the fish tax on
to the secondary buyer.
8:38:42 AM
REPRESENTATIVE LeDOUX inquired as to the impact on the Lake and
Peninsula Borough in relation to the chart entitled,
"Distribution of Fish Business Tax on Fish Exported Unprocessed
Based on 2003 Tax Returns."
REPRESENTATIVE SEATON offered that as the Lake and Peninsula
Borough area increases its flying out of fish, the borough loses
that tax revenue.
8:40:13 AM
REPRESENTATIVE SALMON inquired as to why the raw fish tax
doesn't go to communities outside the coastal communities.
REPRESENTATIVE SEATON explained that the legislation
distributing that portion of the raw fish tax was an attempt to
return the revenue to the ports with the facilities generating
the revenue. Therefore, 50 percent of the raw fish tax was
taken in order to support the coastal communities, fishing
ports. He reminded the committee that the portion going to
DCCED will remain, that is [the tax generated from] fish
processed in the state but outside of a municipality will remain
unaffected, go to DCCED, and be distributed by the formula. The
formula was intended to return the tax somewhat equitably to the
areas generating the revenue. Representative Seaton specified,
"All this bill does is try and say we can refine this process of
trying to support the fishing communities with half of the fish
tax by targeting it to the communities ... that generate that
tax, just like we do with the vast majority of it, which is the
processing tax."
8:43:00 AM
CO-CHAIR THOMAS related his understanding that the 50 percent of
the 3 percent [processing tax] that goes into the GF is how the
revenues are shared across the state.
REPRESENTATIVE SEATON agreed. The distribution of the raw fish
tax attempts to return a portion of it to the location at which
the revenue was generated in order to support the facilities.
8:43:46 AM
REPRESENTATIVE SEATON, in response to Representative Salmon,
clarified that 50 percent of the total tax goes to the GF and
the other 50 percent goes to local communities. The only
question has been in regard to unprocessed exported fish, which
have been treated as if they weren't part of a local community
or infrastructure supporting that fishery. He reminded the
committee of the amendment in the committee packet.
CO-CHAIR THOMAS announced that HB 25 won't be reported out of
committee today because of the new information that has been
provided and concerns that have been expressed.
8:45:47 AM
REPRESENTATIVE LeDOUX asked if there are instances in which fish
are landed in one community and processed in another community
within the state. In such a situation would this legislation
impact the taxation of that fish, she asked.
REPRESENTATIVE SEATON replied no, noting that in such a
situation it's a processing tax that goes to the [processing]
community. This legislation in no way impacts the processing
tax; this legislation only refers to unprocessed exported fish.
8:47:46 AM
REPRESENTATIVE CISSNA moved that the committee adopt Amendment
1, labeled 24-LS0169\G.1, Utermohle, 1/19/05, which read:
Page 3, following line 21:
Insert a new bill section to read:
"* Sec. 5. The uncodified law of the State of
Alaska is amended by adding a new section to read:
APPLICABILITY. The amendments made to
AS 43.75.130 by secs. 1 - 3 of this Act apply only to
fisheries business tax revenue collected by the
Department of Revenue for tax year 2005 and for
subsequent tax years."
Renumber the following bill section accordingly.
There being no objection, Amendment 1 was adopted.
8:48:36 AM
CO-CHAIR THOMAS announced that CSHB 25, as amended, will be held
over.
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 8:49:01 AM.
| Document Name | Date/Time | Subjects |
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